2025:HHC:29194-DB IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA LPA No.20 of 2016 Decided on: 25.08.2025 __________________________________________________________ Himachal Pradesh State Industrial ...Appellant. Development Corporation Limited New Himrus Circular Road Versus Messrs Green View Apartments ...Respondent Company Coram Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice Hon’ble Mr. Justice Ranjan Sharma, Judge 1Whether approved for reporting?. For the appellant: Mr. Mehar Chand, Advocate. For the respondents: Mr. G.D. Verma, Senior Advocate with Mr. Sumit Sharma, Advocate. G.S. Sandhawalia, Chief Justice [Oral] The present Letters Patent Appeal has been filed by the Corporation against the judgment passed by the learned Single Judge in CWP No. 3495 of 2009, titled Green View Apartments versus State of H.P. and others, decided on 28.12.2015 whereby, the writ petition was allowed and directions were issued for quashing the action of appellant-Corporation forfeiting the earnest 1 Whether reporters of Local Papers may be allowed to see the judgment? 2025:HHC:29194-DB - 2 - money of Rs.15,00,000/-. The refund, as such, was directed along with interest @ 12% per annum from the date of its deposit till its payment. 2. During the course of arguments, it transpires that the effect of the order has already been given and the writ petitioner has been paid the said amount along with interest in execution proceedings. Counsel for the appellant has submitted that the forfeiture was justified vide order dated 05.08.2008, (Annexure R-2/1) and, therefore, the learned Single Judge erred in allowing the writ petition. 3. A perusal of the judgment under consideration would go on to show that the learned Single Judge noticed that the two highest bidders were required to deposit the balance amount of 10% earnest money on 05.08.2008 by 3:00 PM, failing which the earnest money deposited by them with their initial bid would stand forfeited. It was thus held that there had to be a lawful and concluded bid, which was unconditionally accepted, and only then the forfeiture clause would come into play. Reference was made to Section 74 of the Indian Contract Act. 2025:HHC:29194-DB - 3 - 4. Reliance was placed upon the judgment of the Hon’ble Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority and Another, (2015) 4 SCC, 136. It was also recorded that the offer of the petitioner for Rs.307 lakh was a conditional one, as there was an issue regarding the sales tax liability of M/s Himachal Filament Private Limited, the original owner whose property was put to sale. The stand of the appellant-Corporation was that the writ-petitioner wanted the deposit to also cover the tax dues amounting to Rs.94,00,000/-. In such circumstances, it was held that since the appellant had not accepted the offer made, and had not suffered any loss for want of the balance 10% deposit, the forfeiture was not justified. 5. We have also gone through the proceedings held on 05.08.2008 (Annexure R-2/1). A perusal of the same would go on to show that apparently the two top bidders were directed by the Negotiation Committee to deposit the balance earnest money by 3:00 PM and were advised to remain present at the meeting of the Sale Sub Committee. The writ petitioner, failed to deposit the amount and the Committee, thereafter, invited them for 2025:HHC:29194-DB - 4 - discussions and gave another opportunity, which was not accepted. Apparently, at that stage, the next two higher bidders, as such, were invited for negotiations and the auction proceedings were accordingly finalized. 6. Perusal of the reply would go on to show that an objection, as such, was raised that the writ petition was not maintainable, since there was also a Civil Suit filed for recovery of the amount against Himachal Filament Private Limited and the plea was taken that the sale was “As is where is and whatever available” basis. 7. Perusal of the paragraph 8 of the written statement would go on to show that there was a dispute regarding the sale dues of Himachal Filament Private Limited, the borrower which were payable to the Excise Department. The petitioner had included this amount while offering a bid of Rs.307.00 lakh, due to which the petitioner did not deposit the balance amount. It is apparent that the Corporation, in its sale notice (Annexure P-3), never disclosed the outstanding tax liability, and had only mentioned that the property was to be sold on “as is where is and whatever available” basis. 2025:HHC:29194-DB - 5 - 8. A perusal of the said notice would go on to show that the assessed value of the property of the unit, which had become sick and was taken over by the Corporation, was fixed at Rs.252.18 lakhs. In the said notice it is nowhere mentioned that there were any other outstanding dues and apparently as per Clause 3 the Corporation had reserved the right to further negotiate the offers and also conduct inter se bidding amongst the bidders and reject the offers without assigning any reason. The offer, as such, had been given along with earnest money equivalent to 10% of the offered amount for the purchase of the assets. 9. The petitioner had apparently given its bid Rs.1.50 crore and 10% of the said amount i.e. Rs.15 lakh was given. On account of the negotiations, as such, the bid had gone up to Rs.307.00 lakh, whereas the second bidder gave Rs.306.00 lakh and thereafter the two highest bidders were directed to deposit the balance amount of the 10% of the earnest money. 10. In the written statement, there is an averment that the petitioner’s offer of Rs.307.00 lakh was conditional and they had imposed a condition to deposit 2025:HHC:29194-DB - 6 - the Sale Tax Dues amounting to Rs.94.00 lac and also to consider Rs.9.40 lac as earnest money without depositing the same. The sale notice was fallen back that the dues were to be paid by the Corporation to the Excise Department, and therefore, the bidder had no justification to include this issue in their offer of Rs.307.00 lakh. 11. The issue of “as-is-where-is” basis has been discussed by the Apex Court regarding the electricity dues and that the purchaser of the premises cannot be foisted with the electricity dues of the previous occupants. In Pashimanchal Vidyut Vitran Nigam Limited and Others v. DVS Steels and alloys Private Limited and Others, (2009) 1 SCC 210. 12. Similarly, in Haryana State Electricity Board v. M/s Hanuman Rice Mills & Ors. (2010) 9 SCC 145, it was held that where electricity dues are not mentioned in terms and conditions of sale, the same could not be put on the subsequent transferee. 13. The said view was thereafter followed in Special Officer, Commerce North Eastern Electricity, Supply Company of Orissa (NESCO) and Another v. 2025:HHC:29194-DB - 7 - Raghunath Paper Mills Private Limited and Another, (2012) 13 SCC 479. 14. In Southern Power Distribution Company of Telangana Limited (Through its CMD) and Others v. Gopal Agarwal and Others, (2018) 12 SCC 644, it was held that purchaser of the auction sale had not undertaken to discharge the liability of the previous consumer then being not connected to the past owner he was not liable to pay the past arrears and once the tender sale notice mentioned that the property was being auctioned on “as-is-where-is” basis. 15. The three-judge Bench in K.C. Ninan v. Kerala State Electricity Board and Others., (2023) 14 SCC 431, while elaborating on the principle of sale on “as-is-where-is” basis, held that the seller is under an obligation to disclose material defects in the property of which he is aware and which a buyer could not with ordinary care discover for himself. Therefore, while examining the fact “as-is-where-is” clause, the circumstances of each case the consideration has been done to arrive an equitable decision. 16. In such circumstances, once the factum of 2025:HHC:29194-DB - 8 - other outstanding arrears was not made clear and the amount had not been deposited on that account, this Court is of the considered opinion that the Corporation was also estopped from forfeiting the amount, as it had not clearly disclosed the complete outstanding tax dues of the defaulting unit, which it was trying to foist upon the petitioner-bidder. Therefore, we find that the order of the learned Single Judge is well justified. For its own fault, the Corporation could not have forfeited the amount, as apparently, the writ petitioner did not want the additional burden of tax liability to be fastened over and above the bid amount. 17. Resultantly, we do not find any merit in the present appeal and the same is dismissed. Pending miscellaneous application(s), if any, shall also stand disposed of. (G.S. Sandhawalia) Chief Justice (Ranjan Sharma) Judge 25th August, 2025 [himani/shivender]